Industrial Scenario of West Bengal
West Bengal, the sixth largest economy in India, had a gross state domestic product (GSDP) of $132.86 billion in 2014-15. Known for its cultural grandeur and colonial legacy, much of the post-Independent story is all about the Communist parties (Left Front) who have created a deep social and psychological impact on Bengalis.
There is no talk of industrial progress, wooing investors or creating wealth as Marxist ideologies came into full play. As a result, West Bengal was relegated to obscurity in terms of social and economic progress till the arrival of firebrand Mamata Banerjee. TMC chief was voted to power with two-thirds majority as the Left Front led byCPI(M) suffered a humiliating defeat in the 2011 assembly election.
A new ray of hope dawned as Mamata promised swift and transparent actions to make Bengal an industrial hub in no time.
Future holds promise
From 2004-05 till 2014-15, West Bengal grew at an annual rate of 11.06% with key indicators of industrial growth showing a healthy trend. The state’s per capita GSDP in 2014-15 was $1,450 as compared to $555 in 2004-05. The per capita GSDP increased at an annual rate of 10.08% between 2004-05 and 2014-15.
The natural resources, policy incentives and infrastructure in the state support investments in major sectors such as iron and steel, biotech, coal, leather, jute products, tea, IT, gems and jewellery. The state has 3,000 acres of land at its disposal to set up industries.
West Bengal has 12 growth centres (as on Aug. 2015) for medium and large scale industries set up by the West Bengal Industrial Development Corporation (WBIDC).
There are exclusive growth centres for electronics, software technology and export processing. Major industrial areas of West Bengal are Haldia, Kolkata, Asansol-Durgapur region, and Kharagpur.
Major state initiatives
Some of the major initiatives taken by the government to promote West Bengal as an investment destination are:
- Under the Smart City Programme, the state government has announced plans to build 7 smart cities in West Bengal.
- The four cities of New Town Kolkata, Bidhannagar, Durgapur and Haldia, have already been selected under the central government's flagship Smart Cities project.
- The state government of West Bengal has proposed an investment of $8.2 billion for Budget 2015-16.
- It has allocated $99.67 million for constructing Asia Highway-2, which will connect the Nepal Border (Kakarbhita) to Bangladesh Border (Banglabandha).
- The state government has set up an integrated leather complex on the eastern fringe of Kolkata spread over 1,100 acres.
- In 2014-15, the state government commissioned a 250 MW thermal power unit in Durgapur and renovated a 210 MW of Bandel thermal power station.
- The third and fourth units of Sagardighi thermal power plant, of 500 MW each, are expected to be operational in 2015-16.
- In 2014-15, the state government approved the construction of a 293 MW hydropower plant in Darjeeling district. The plant is expected to be operational by 2016.
- Three steel parks are expected to be established in Raghunathpur at an investment of about $5.9 billion.
- Under Backward Regions Grant Fund Programme (BRGF), 171 projects for widening and strengthening of 2,087 km of roads and 18 new bridges were completed and are fully operational from September 2015.
In 2014-15, the tertiary sector (services) contributed 60.2% to the GSDP followed by the primary sector (24.9%) and secondary sector (14.9%). At an annual growth rate of 12.1%, the tertiary sector has been the fastest growing among the three sectors from 2004-05 to 2014-15. The growth has been driven by trade, hotels, real estate, finance, insurance, transport, communications and other services.
The primary sector (agriculture) grew at a rate of 10.9% between 2004-05 and 2014-15. The secondary sector (manufacturing) grew at a rate of 7.7% between 2004-05 and 2014-15. It was driven by manufacturing, construction, electricity, gas and water supply. According to the Department of Industrial Policy and Promotion (DIPP), FDI inflows from April 2000 to March 2015 totalled $2.9 billion.
FDI inflows in West Bengal from April 2014 to March 2015 totalled $239 million. In addition, the inflows during April 2015-May 2015 were recorded at $43 million. West Bengal contributes around 1% in the total FDI inflows to the country. Total exports of West Bengal stood at about $9.02 billion in 2014-15.
Leather exports from the state constitute about 12% of India’s total leather goods exports. West Bengal is the country’s leading exporter of flowers. In addition, the state has the country’s largest brackish-water resources for shrimp farming and has been a leading exporter of shrimps. West Bengal is the leading exporter of potatoes to Sri Lanka and Bangladesh.
The other export products include jute, tea and rice, among others.
- West Bengal has 12 growth centres for medium and largescale industries, set up by the West Bengal Industrial Development Corporation (WBIDC).
- There are exclusive growth centres for electronics, software technology and export processing.
- The Naba Diganta industrial township was set up inJanuary 2006, in Kolkata’s Salt Lake township to encourageIT and related industries.
- West Bengal’s major industrial areas are Haldia, Kolkata,Asansol-Durgapur region and Kharagpur.
- WBIDC helps get clearances required for setting upindustry.
- WBIDC also focuses on sector-specific infrastructure forindustries such as food, apparel, IT, electronics,engineering, gems and jewellery, cement and chemicals.
Under Smart City Program, the state government has announced to build seven smart cities in West Bengal. Five of them have been identified. The locations that have been identified are near Kolkata,Durgapur, Habra, Jangipur and Haldia.
Key industries in West Bengal
Climatic conditions suitable for cultivation of tea and jute have made West Bengal a major centre for these products andrelated industries. West Bengal occupies a dominant position in the development of micro and small scale enterprises. The state has 3.5 million working micro, small and medium enterprises (both registered & unregistered) providing employment to around 8.6 million persons.
During 2014-15, West Bengal assisted 3,397 projects and $9.98 million margin money subsidy has been released. In addition, it is estimated that under these projects, employment for around 24,646 additional people has been generated in 2014-15 under Prime Minister's Employment Generation Programme (PMEGP).
In 2014, West Bengal received 156 investment proposals that were worth $4.69 billion.
- West Bengal is the second-largest tea growing state inIndia accounting for around 27.88% of country's total production in 2014-15.
- The total tea production in the state was around 329.3million kg in 2014-15.
- Tea gardens in the state are located in Darjeeling andJalpaiguri, the two northern districts of West Bengal.
- West Bengal accounted for around 3.6% of the country’s refinery crude throughput in 2013-14.
- The state accounts for about 4% of the total production ofpetroleum products in India.
- Haldia Petrochemicals Limited is one of India’s largestintegrated petrochemical complexes.
- Indian Oil Corporation plans to increase crude refiningcapacity to 1.85 million barrels per day (bpd) by 2016-17from 1.47 barrels per day in 2014-15.
- The company will also increase its Haldia plant capacity by10,000 bpd in 2016-17 from 172,000 bpd as of 2014-15.
- West Bengal is one of the leading exporters of finishedleather goods.
- The state’s leather exports constitute around 13.9% of India’s total leather goods exports in 2013-14.
- As of 2014, the state had around 666 manufacturing units producing leather and leather goods.
- West Bengal government has set up an integrated leather complex on the eastern fringe of Kolkata, spread over 1,100 acres.
- Kolkata is the second most important tanning centre of India accounting for 22-25% of the country’s tanningactivity.
Iron and steel:
- The large deposits of iron ore in West Bengal have helped attract new projects.
- The Chhota Nagpur plateau bordering West Bengal is the nerve-centre of iron and steel industry.
- West Bengal accounts for about 10% of the country’stotal steel capacity.
- Durgapur, popularly named the ‘Steel City of Eastern India’,has two major steel plants: Durgapur Steel Plant and AlloySteel Plant.
- Modernisation and expansion projects at Durgapur plant will increase its capacity to 2.12 million tonnes from the present 1.6 million tonnes.
- Three steel parks are expected to be established inRaghunathpur at an investment of about $5.9 billion.
- The estimated land requirement of over 7,000 acres wouldbe distributed among the three major private players in Raghunathpur.
- All the three steel parks are expected to become fully operational by 2020.
- In Bengal Global Summit held in January 2015, the statehas announced investment of $6.6 billion for the expansion of the Durgapur Steel plant.
- West Bengal’s textile industry is centred aroundhandlooms, power looms, jute and silk.
- West Bengal is the seat of the hosiery industry in India, with 17,900 hosiery units.
- The state holds a distinction for the manufacture offour types of commercially traded silk: mulberry, tasar, eriand muga.
- As of 2014-15, the industry’s size was estimated at $4.5billion.
- The raw silk production in the state was recorded ataround 2,500 MT in 2014-15.
- The Textile Policy 2013-18 aims to increase the sector’s contribution to 10% of the state GDP by 2022-23 from 5.2% in 2013.
- It is expected that once Textile Policy is implemented fully, it would provide employment to at least 10 million people.
- Over 500 IT and ITeS companies operate in the state,employing nearly 1,30,000 professionals in 2013-14.
- The state has identified IT as a priority focus sector to bedeveloped into a growth engine for the future.
- West Bengal has 11 IT/ITeS based SEZs with formalapproval as of July 2015.
- A 16.19 hectares SEZ by TCS has been granted formal approval.
- TCS plans to invest $248.6 million in the IT SEZ at Rajarhat which is expected to be operational by the end of 2015.
- By 2015-16, eight IT parks located at Barjora, Rajarhat,Asansol, Durgapur Phase-II, Bolpur, Siliguri Phase-II,Puralia and Kharagpur will start operating.
- The establishment of seven new IT parks at Haldia,Krishnanagar, Kalyani, Bantala, Taratala, Howrah and Malda isexpected to start soon by end-2020.
- Around 20,000 new employment opportunities are expectedwith the implementation of these IT parks.
Automobile and auto components:
- The automobile industry in West Bengal is dominated by the original equipment manufacturers (OEMs).
- The auto components industry comprises units manufacturing a range of products from simple nuts and bolts to complex items such as shafts, radiators and axles.
- Easy access to raw materials such as iron and steel is an advantage for the growth of the auto components sector in West Bengal.
- West Bengal’s automobile market grew at a rate of 9.3% from 2011 to 2014.
- Owing to rising investments and growing demand from exports, the automobile industry of the state is projected to grow at a rate of over 15% till 2020.
- West Bengal has six agro-climatic zones and offers a diverse variety of topography for horticulture production.
- The state is estimated to have produced 3.19 million tonnes of fruits and around 26 million tonnes of vegetables in 2013-14.
- Floriculture is an emerging industry in West Bengal with high prospects.
- In 2013-14, total production of flowers (loose) is estimated at 66,500 MT.
- Total production of cut flowers stood at 26,135 lakh units in 2013-14.
- In 2013-14, the state had gross area of 24,850 hectares under flower production.
- West Bengal tops the list of states in horticulture with an estimated production of 27.4 million tonnes in 2014-15.